Senate Bill No. 243-Committee on Commerce and Labor
March 27, 1997
____________
Referred to Committee on Commerce and Labor
SUMMARY--Revises various provisions relating to employee leasing companies. (BDR 53-176)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: Yes.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to industrial insurance; revising the qualifications for operating an employee leasing company; eliminating the requirement that an employee leasing company maintain an office in this state; authorizing an employee leasing company to act as a self-insured employer under certain circumstances; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
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Section 1 NRS 616A.465 is hereby amended to read as follows:
616A.465 1. Except as otherwise provided in this section, the division shall regulate insurers under chapters 616A to 617, inclusive, of NRS and investigate insurers regarding compliance with statutes and the division's regulations.
2. The commissioner is responsible for [reviewing rates, investigating] :
(a) Reviewing rates;
(b) Investigating the solvency of insurers [and certifying] ;
(c) Certifying self-insured employers, associations of self-insured public or private employers and third-party administrators pursuant to NRS 616B.300 to 616B.330, inclusive, 616B.336, 616B.350 to 616B.446, inclusive, and chapter 683A of NRS [.] ; and
(d) Issuing certificates of registration to employee leasing companies pursuant to NRS 616B.673.
3. The department of administration is responsible for contested claims relating to workers' compensation pursuant to NRS 616C.310 to 616C.385, inclusive. The system is responsible for administrative appeals pursuant to NRS 616B.215.
4. The Nevada attorney for injured workers is responsible for legal representation of claimants pursuant to NRS 616A.435 to 616A.460, inclusive, and 616D.120.
5. The division is responsible for the investigation of complaints. If a complaint is filed with the division, the administrator shall cause to be conducted an investigation which includes a review of relevant records and interviews of affected persons. If the administrator determines that a violation may have occurred, the administrator shall proceed in accordance with the provisions of NRS 616D.120 and 616D.130.
Sec. 2 NRS 616B.300 is hereby amended to read as follows:
616B.3001. An employer may qualify as a self-insured employer by establishing to the satisfaction of the commissioner that the employer [has] :
(a) Has sufficient administrative and financial resources to make certain the prompt payment of all compensation under chapters 616A to 616D, inclusive, or chapter 617 of NRS [.] ; and
(b) If the employer is an employee leasing company as defined in NRS 616B.670, is accredited by the Institute for the Accreditation of Professional Employer Organizations, or its successor organization.
2. A self-insured employer must, in addition to [establishing financial ability to pay,] complying with the provisions of subsection 1, deposit with the commissioner a bond executed by the employer as principal, and by a corporation qualified under the laws of this state as surety, payable to the State of Nevada, and conditioned upon the payment of compensation for injuries and occupational diseases to employees. The bond must be in an amount reasonably sufficient to ensure payment of compensation, but in no event may it be less than 105 percent of the employer's expected annual incurred cost of claims, or less than $100,000. In arriving at an amount for the expected annual cost of claims, due consideration must be given to the past and prospective experience of the employer with losses and expenses within this state, to the hazard of catastrophic loss, to other contingencies, and to trends within the state. In arriving at the amount of the deposit required, the commissioner may consider the nature of the employer's business, the financial ability of the employer to pay compensation and his probable continuity of operation.
3. In lieu of a bond the employer may deposit with the commissioner a like amount of lawful money of the United States or any other form of security authorized by NRS 100.065. If security is provided in the form of a savings certificate, certificate of deposit or investment certificate, the certificate must state that the amount is unavailable for withdrawal except upon order of the commissioner.
4. The required deposit may be increased or decreased by the commissioner in accordance with chapter 681B of NRS and his regulations for loss reserves in casualty insurance. If the commissioner requires an employer to increase his deposit, the commissioner may specify the form of the additional security. The employer shall comply with such a requirement within 60 days after receiving notice from the commissioner.
5. The commissioner shall require the self-insured employer to submit evidence of excess insurance to provide protection against a catastrophic loss. The excess insurance must be written by an insurer authorized to do business in this state. The commissioner shall consider the excess insurance coverage as a basis for a reduction in the deposit required of an employer.
6. The account for self-insured employers is hereby created in the state agency fund for bonds. All money received by the commissioner pursuant to this section must be deposited with the state treasurer to the credit of the account for self-insured employers. All claims against this account must be paid as other claims against the state are paid.
Sec. 3 NRS 616B.318 is hereby amended to read as follows:
616B.3181. The commissioner shall impose an administrative fine, not to exceed $1,000 for each violation, and:
(a) Shall withdraw the certification of a self-insured employer if:
(1) The deposit required pursuant to NRS 616B.300 is not sufficient and the employer fails to increase the deposit after he has been ordered to do so by the commissioner;
(2) The self-insured employer fails to provide evidence of excess insurance pursuant to NRS 616B.300 within 45 days after he has been so ordered; [or]
(3) The employer becomes insolvent, institutes any voluntary proceeding under the Bankruptcy Act or is named in any involuntary proceeding thereunder [.] ; or
(4) The self-insured employer is an employee leasing company as defined in NRS 616B.670 and fails to maintain his accreditation with the Institute for the Accreditation of Professional Employer Organizations, or its successor organization.
(b) May withdraw the certification of a self-insured employer if:
(1) The employer intentionally fails to comply with regulations of the commissioner regarding reports or other requirements necessary to carry out the purposes of chapters 616A to 616D, inclusive, of NRS;
(2) The employer violates the provisions of subsection 2 of NRS 616B.500 or any regulation adopted by the commissioner or the administrator concerning the administration of the employer's plan of self-insurance; or
(3) The employer makes a general or special assignment for the benefit of creditors or fails to pay compensation after an order for payment of any claim becomes final.
2. Any employer whose certification as a self-insured employer is withdrawn must, on the effective date of the withdrawal, qualify as an employer pursuant to NRS 616B.650.
3. The commissioner may, upon the written request of an employer whose certification as a self-insured employer is withdrawn pursuant to subparagraph (3) of paragraph (a) of subsection 1, reinstate the employer's certificate for a reasonable period to allow the system sufficient time to provide industrial insurance for the employer.
Sec. 4 NRS 616B.327 is hereby amended to read as follows:
616B.3271. Except as otherwise provided in this section and NRS 616D.120, before any action may be taken pursuant to subsection 2, the commissioner of insurance shall arrange an informal meeting with the self-insured employer to discuss and seek correction of any conduct which would be grounds for withdrawal of the self-insured employer's certificate of self-insurance.
2. Except as otherwise provided in this section and NRS 616D.120, before the withdrawal of the certification of any self-insured employer, the commissioner of insurance shall give written notice to that employer by certified mail that his certification will be withdrawn 10 days after receipt of the notice unless, within that time, the employer corrects the conduct set forth in the notice as the reason for the withdrawal or submits a written request for a hearing to the commissioner of insurance. Before requesting a hearing the employer must make the deposit required by NRS 616B.300.
3. If the employer requests a hearing:
(a) The commissioner of insurance shall set a date for a hearing within 20 days after receiving the appeal request, and shall give the employer at least 10 business days' notice of the time and place of the hearing.
(b) A record of the hearing must be kept but it need not be transcribed unless requested by the employer with the cost of transcription to be charged to the employer.
(c) Within 5 business days after the hearing, the commissioner of insurance shall either affirm or disaffirm the withdrawal and give the employer written notice thereof by certified mail. If withdrawal of certification is affirmed, the withdrawal becomes effective 10 business days after the employer receives notice of the affirmance unless within that period of time the employer corrects the conduct which was ground for the withdrawal or petitions for judicial review of the affirmance.
4. The commissioner shall, without complying with the provisions of this section, withdraw the certification of a self-insured employer if:
(a) The self-insured employer is an employee leasing company as defined in NRS 616B.670; and
(b) After a hearing, the commissioner determines that he has not maintained his accreditation with the Institute for the Accreditation of Professional Employer Organizations, or its successor organization.
5. If the withdrawal of certification is affirmed following judicial review, the withdrawal becomes effective 5 days after entry of the final decree of affirmance.
Sec. 5 NRS 616B.670 is hereby amended to read as follows:
616B.670As used in NRS 616B.670 to 616B.697, inclusive, unless the context otherwise requires:
1. "Applicant" means a person seeking a certificate of [insurance] registration pursuant to NRS 616B.670 to 616B.697, inclusive, to operate an employee leasing company.
2. "Client company" means a company which leases employees, for a fee, from an employee leasing company pursuant to a written or oral agreement.
3. "Employee leasing company" means a company which, pursuant to a written or oral agreement:
(a) Places any of the regular, full-time employees of a client company on its payroll and, for a fee, leases them to the client company on a regular basis without any limitation on the duration of their employment; or
(b) Leases to a client company:
(1) Five or more part-time or full-time employees; or
(2) Ten percent or more of the total number of employees within a classification of risk established by the [system.] commissioner.
Sec. 6 NRS 616B.673 is hereby amended to read as follows:
616B.673 1. A person shall not operate an employee leasing company in this state unless he has complied with the provisions of NRS 616B.670 to 616B.697, inclusive. The [manager] commissioner shall issue a certificate of [insurance] registration to each applicant who complies with the provisions of NRS 616B.670 to 616B.697, inclusive.
2. Any person who violates the provisions of subsection 1 is guilty of a misdemeanor.
3. Each certificate of [insurance] registration issued by the [manager] commissioner pursuant to NRS 616B.670 to 616B.697, inclusive, expires 1 year after it is issued unless renewed before that date.
Sec. 7 NRS 616B.676 is hereby amended to read as follows:
616B.676 An applicant for the issuance or renewal of a certificate of [insurance] registration must submit to the [manager] commissioner a written application upon a form provided by the [manager.] commissioner.
Sec. 8 NRS 616B.679 is hereby amended to read as follows:
616B.679 1. Each application must include:
(a) The applicant's name and title of his position with the employee leasing company.
(b) The applicant's age, place of birth and social security number.
(c) The applicant's address.
(d) The business address of the employee leasing company.
(e) The business address of the resident agent of the employee leasing company, if the applicant is not the resident agent.
(f) If the applicant is a:
(1) Partnership, the name of the partnership and the name, address, age, social security number and title of each partner.
(2) Corporation, the name of the corporation and the name, address, age, social security number and title of each officer of the corporation.
(g) A copy of the applicant's certificate of industrial insurance issued by the applicant's insurer or a copy of the applicant's certificate to act as a self-insured employer or an association of self-insured public or private employers issued by the commissioner.
(h) Proof of:
(1) The payment of any taxes required by chapter 364A of NRS.
(2) [The payment of any premiums for industrial insurance required by chapters 616A to 617, inclusive, of NRS.
(3)] The payment of contributions or payments in lieu of contributions required by chapter 612 of NRS.
[(4)] (3) Insurance coverage for any benefit plan from an insurer authorized pursuant to Title 57 of NRS that is offered by the employee leasing company to its employees.
[(5) Membership in the National Staff Leasing Association,]
(4) Accreditation by the Institute for the Accreditation of Professional Employer Organizations, or its successor organization [.
(h)] , if the employee leasing company is a self-insured employer.
(i) Any other information the [manager] commissioner requires.
2. Each application must be notarized and signed under penalty of perjury:
(a) If the applicant is a sole proprietorship, by the sole proprietor.
(b) If the applicant is a partnership, by each partner.
(c) If the applicant is a corporation, by each officer of the corporation.
3. An applicant shall submit to the [manager] commissioner any change in the information required by this section within 30 days after the change occurs. The [manager] commissioner may revoke the certificate of [insurance] registration of an employee leasing company which fails to comply with provisions of [this subsection. If the manager revokes the certificate of insurance and cancels the] NRS 616B.670 to 616B.697, inclusive. If an insurer cancels an employee leasing company's policy, the [manager] insurer shall immediately notify the [administrator, who shall proceed in accordance with the provisions of NRS 616D.110.] commissioner of the cancellation.
Sec. 9 NRS 616B.691 is hereby amended to read as follows:
616B.691 1. For the purposes of chapters 364A, 612 and 616A to 617, inclusive, of NRS, an employee leasing company which complies with the provisions of NRS 616B.670 to 616B.697, inclusive, shall be deemed to be the employer of the employees it leases to a client company.
2. An employee leasing company shall be deemed to be the employer of its leased employees for the purposes of sponsoring and maintaining any benefit plans.
3. [An employee leasing company shall not offer its employees any self-funded insurance program. An employee leasing company shall not act as a self-insured employer pursuant to chapters 616A to 616D, inclusive, or chapter 617 of NRS or pursuant to Title 57 of NRS.
4.] If an employee leasing company fails to:
(a) Pay any contributions, premiums, forfeits or interest due; or
(b) Submit any reports or other information required,
pursuant to this chapter or chapter 612, 616A, 616C, 616D or 617 of NRS, the client company is jointly and severally liable for the contributions, premiums, forfeits or interest attributable to the wages of the employees leased to it by the employee leasing company.
Sec. 10 NRS 616B.694 is hereby amended to read as follows:
616B.694 The [manager, in cooperation with the administrator of the employment security division of the department of employment, training and rehabilitation, shall, and the commissioner of insurance may,] commissioner may adopt regulations to carry out the provisions of NRS 616B.670 to 616B.697, inclusive.
Sec. 11 NRS 616B.697 is hereby amended to read as follows:
616B.697 An action for damages caused by the failure of an employee leasing company to comply with the provisions of NRS 616B.670 to 616B.697, inclusive, may be brought against any person who is required to sign the application for a certificate of [insurance] registration for the employee leasing company.
Sec. 12 Section 53 of chapter 580, Statutes of Nevada 1995, at page 2010, is hereby amended to read as follows:
Sec. 53. NRS 616A.465 is hereby amended to read as follows:
616A.465 1. Except as otherwise provided in this section, the division shall [regulate insurers under] :
(a) Certify or authorize whether an insurer meets the requirements of chapters 616A to 617, inclusive, of NRS to provide industrial insurance;
(b) Regulate insurers pursuant to chapters 616A to 617, inclusive, of NRS [and investigate] ;
(c) Investigate insurers regarding compliance with statutes and the division's regulations [.] ; and
(d) If necessary, suspend the certification or authorization of an insurer to provide industrial insurance.
2. The commissioner is responsible for:
(a) Reviewing rates;
(b) Investigating the solvency of insurers;
(c) Authorizing private carriers pursuant to chapter 680A of NRS;
(d) Certifying [self-insured employers, associations of self-insured public or private employers and third-party administrators] :
(1) Self-insured employers pursuant to NRS 616B.300 to 616B.330, inclusive, and 616B.336 [,] ;
(2) Associations of self-insured public or private employers pursuant to NRS 616B.350 to 616B.446, inclusive [,] ; and
(3) Third-party administrators pursuant to chapter 683A of NRS; and
[(d)] (e) Issuing certificates of registration to employee leasing companies pursuant to NRS 616B.673.
3. The department of administration is responsible for contested claims relating to [workers' compensation] industrial insurance pursuant to NRS 616C.310 to 616C.385, inclusive. The [system] administrator is responsible for administrative appeals pursuant to NRS 616B.215.
4. The Nevada attorney for injured workers is responsible for legal representation of claimants pursuant to NRS 616A.435 to 616A.460, inclusive, and 616D.120.
5. The division is responsible for the investigation of complaints. If a complaint is filed with the division, the administrator shall cause to be conducted an investigation which includes a review of relevant records and interviews of affected persons. If the administrator determines that a violation may have occurred, the administrator shall proceed in accordance with the provisions of NRS 616D.120 and 616D.130.
Sec. 13 Section 71 of chapter 580, Statutes of Nevada 1995, at page 2018, is hereby amended to read as follows:
Sec. 71. NRS 616B.318 is hereby amended to read as follows:
616B.318 1. The commissioner shall impose an administrative fine, not to exceed $1,000 for each violation, and:
(a) Shall withdraw the certification of a self-insured employer if:
(1) The deposit required pursuant to NRS 616B.300 is not sufficient and the employer fails to increase the deposit after he has been ordered to do so by the commissioner;
(2) The self-insured employer fails to provide evidence of excess insurance pursuant to NRS 616B.300 within 45 days after he has been so ordered;
(3) The employer becomes insolvent, institutes any voluntary proceeding under the Bankruptcy Act or is named in any involuntary proceeding thereunder; or
(4) The self-insured employer is an employee leasing company as defined in NRS 616B.670 and fails to maintain his accreditation with the Institute for the Accreditation of Professional Employer Organizations, or its successor organization.
(b) May withdraw the certification of a self-insured employer if:
(1) The employer intentionally fails to comply with regulations of the commissioner regarding reports or other requirements necessary to carry out the purposes of chapters 616A to 616D, inclusive, of NRS;
(2) The employer violates the provisions of subsection 2 of NRS 616B.500 or any regulation adopted by the commissioner or the administrator concerning the administration of the employer's plan of self-insurance; or
(3) The employer makes a general or special assignment for the benefit of creditors or fails to pay compensation after an order for payment of any claim becomes final.
2. Any employer whose certification as a self-insured employer is withdrawn must, on the effective date of the withdrawal, qualify as an employer pursuant to NRS 616B.650.
3. The commissioner may, upon the written request of an employer whose certification as a self-insured employer is withdrawn pursuant to subparagraph (3) of paragraph (a) of subsection 1, reinstate the employer's certificate for a reasonable period to allow the [system] employer sufficient time to provide industrial insurance for [the employer.] its employees.
Sec. 14 1. NRS 616B.682 is hereby repealed.
2. Section 62 of chapter 580, Statutes of Nevada 1995, at page 2014, is hereby repealed.
TEXT OF REPEALED SECTIONS
616B.682 Employee leasing companies to maintain office or similar site in state for retaining, reviewing and auditing payroll records and written agreements. Each employee leasing company operating in this state shall maintain an office or similar site in this state for retaining, reviewing and auditing its payroll records and written agreements with client companies.
Section 62 of chapter 580, Statutes of Nevada 1995:
Sec. 62. NRS 616.2545 is hereby amended to read as follows:
616.2545 1. For the purposes of this chapter and chapters 364A, 612 and 617 of NRS, an employee leasing company which complies with the provisions of NRS 616.254 to 616.2547, inclusive, shall be deemed to be the employer of the employees it leases to a client company.
2. An employee leasing company shall be deemed to be the employer of its leased employees for the purposes of sponsoring and maintaining any benefit plans.
3. An employee leasing company may not offer its employees any self-funded insurance program. An employee leasing company may not act as a self-insured employer or be a member of an association of self-insured public or private employers pursuant to this chapter or chapter 617 of NRS or pursuant to Title 57 of NRS.
4. If an employee leasing company fails to:
(a) Pay any contributions, premiums, forfeits or interest due; or
(b) Submit any reports or other information required,
pursuant to this chapter or chapter 612 or 617 of NRS, the client company is jointly and severally liable for the contributions, premiums, forfeits or interest attributable to the wages of the employees leased to it by the employee leasing company.